Why Pay and Prepare Your Taxes

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Tax Tips for Federal Withholdings | W-4

The most common reason why you may not received a tax refund when filing your taxes is because your withholding is wrong. This applies to most W-2 filers only. Getting your withholding right enables you to receive a refund. Below is what the IRS suggest you do to ensure you have selected the correct withholding.

All taxpayers should review their federal withholding each year to make sure they’re not having too little or too much tax withheld. Doing this now can help protect against facing an unexpected tax bill or penalty in 2023. The sooner taxpayers check their withholding, the easier it is to get the right amount of tax withheld.

Taxpayers whose employers withhold federal income tax from their paycheck can use the IRS Tax Withholding Estimator to help decide if they should make a change to their withholding. This online tool guides users through the process of checking their withholding to help determine the right amount to withhold for their personal situation. Taxpayers can check with their employer to update their withholding or submit a new Form W-4, Employee’s Withholding Certificate.

Adjustments to withholding
Individuals should generally increase withholding if they hold more than one job at a time or have income from sources not subject to withholding. If they don’t make any changes, they may owe additional tax and possibly penalties when filing their tax return.

Individuals should generally decrease their withholding if they qualify for income tax credits or deductions other than the basic standard deduction.

Either way, those who need to adjust their withholding must prepare a new Form W-4, Employee’s Withholding Certificate. They need to submit the new Form W-4 to their employer as soon as possible since withholding occurs throughout the year.

Individuals who should check their withholding include those:

  • who experienced a marriage, divorce, birth or adoption of child, purchase of a new home or retirement
  • who are working two or more jobs at the same time or who only work for part of the year
  • who claim credits such as the child tax credit
  • with dependents age 17 or older
  • who itemized deductions on prior year returns
  • with other personal and financial changes

Tax Withholding Estimator benefits
The IRS Tax Withholding Estimator can help taxpayers:

  • determine if they should complete a new Form W-4.
  • know what information to put on a new Form W-4.
  • save time because the tool completes the form worksheets.

Taxpayers should prepare before using the Tax Withholding Estimator by having their most recent pay statements, information for other income sources and their most recent income tax return. The tool does not ask for sensitive information such as name, Social Security number, address, or bank account numbers.

Taxpayers shouldn’t use the Tax Withholding Estimator if:

  • They have a pension but not a job. They should estimate their tax withholding with the new Form W-4P.
  • They have nonresident alien status. They should use Notice 1392, Supplement Form W-4 Instructions for Nonresident Aliens.
  • Their tax situation is complex. This includes alternative minimum tax, long-term capital gains or qualified dividends. See Publication 505, Tax Withholding and Estimated Tax.


More information:
Tax Withholding Estimator FAQs

STIMULUS PAYMENTS – IRS Letters 6475 | 6331C or 5071 | 4883C or 6330C

The Economic Impact Payments (EIP) commonly refer to as Stimulus Payment is about to be phase out this tax season. If you have not received your stimulus payments, now is the time.

The IRS have been sending out letters to taxpayers who they believe did not get their stimulus money or may have gotten the first payment and never did get the second or third payment. The IRS is asking taxpayer to file a tax return.

Even if you think you did not get your stimulus payments, the IRS encourage you a file a tax return for 2020 and 2021 and claim the Recovery Rebate Credit (RRC).

Because of the many scams out there, the IRS are requesting taxpayers who filed for stimulus payments to verify that they are the one that filed the return. [IRS Letter 5071C or 6331C]

We at PREMIER Financial Tax & Accounting Services dba FRIENDLY Tax Services can help get you your STIMULUS MONEY. Contact us

IRS LETTER 6475 – The letter contains the total amount of the third Economic Impact Payment and any plus-up payments received. The letter should provide information to calculate the correct 2021 Recovery Rebate Credit (RRC) amount when you file your tax return for 2021. FAILURE TO USE THE CORRECT PAYMENT AMOUNT CREATE DELAYS IN PROCESSING YOUR REFUND.

IRS LETTER 5071C or 6331C – This letter simply says that you will need to verify your identity.

What You Need To Do Immediately

Go to our secure Identity Verification Service to verify your identity. It’s quick, secure, and available 24 hours a day.

  • You must register to the website before verifying your identity. Be sure to check the website and prepare all the documents needed to complete the registration.
  • Have a copy of the 5071C or 6331C letter you received and a copy of the tax return for the tax year shown in the letter.
  • If you did not file an income tax return, you can indicate that on the website.

If You Want to Call the IRS

If you prefer to talk to our representative, call the toll-free IRS Identity Verification telephone number in the 5071C or 6331C letter.

Note: Although the letters request a response within 30 days, the IRS will continue to work with you regardless of the amount of days that have passed.

Have ALL of the following available when you call:

  • The 5071C or 6331C letter;
  • The tax return referenced in the letter (the Form 1040 series return). Note: A Form W-2, Form 1099 is not a tax return;
  • A prior year’s income tax return, other than the year in the letter, if you filed one. Note: A Form W-2, Form 1099 is not a tax return; and
  • Supporting documents that you filed with each year’s tax return. (Form W-2, Form 1099, Schedule C or F, etc.).

Note: Authorized third parties may assist taxpayers, but the taxpayer must call us together and must participate on the call.

LETTER 4883C or 6330C – Call us so we can verify your identity and process your federal income tax return.

What You Need To Do Immediately

CALL US at the phone number in your letter with the information listed below. When you call, we’ll ask questions to verify your identity.

Note: Although the letters request a response within 30 days, the IRS will continue to work with you regardless of the amount of days that have passed.

Have ALL of the following available when you call:

  • The 4883C or 6330C letter;
  • The income tax return referenced in the letter (the Form 1040 series return). Note: A Form W-2 or Form 1099 is not a tax return;
  • A prior year income tax return, other than the year in the letter, if you filed one. Note: A Form W-2 or Form 1099 is not a tax return; and
  • Supporting documents that you filed with each year’s income tax return (Form W-2 or Form 1099, Schedules C or F, etc.).

NOTE: Authorized third parties may assist taxpayers, but the taxpayer must call us together and must participate on the call.

The toll-free IRS Identity Verification number is for identity verification only. No other tax-related information, including refund status, is available.

Home Office Deduction Self-Employed

The home office deduction allows qualified taxpayers to deduct certain home expenses when they file taxes. To claim the home office deduction on their 2021 tax return, taxpayers generally must exclusively and regularly use part of their home or a separate structure on their property as their primary place of business.

Here are some details about this deduction to help taxpayers determine if they can claim it:

  • Employees are not eligible to claim the home office deduction.  
  • The home office deduction, calculated on Form 8829, is available to both homeowners and renters.  
  • There are certain expenses taxpayers can deduct. These may include mortgage interest, insurance, utilities, repairs, maintenance, depreciation and rent.  
  • Taxpayers must meet specific requirements to claim home expenses as a deduction. Even then, the deductible amount of these types of expenses may be limited.  
  • The term “home” for purposes of this deduction:  
    • Includes a house, apartment, condominium, mobile home, boat or similar property.
    • Also includes structures on the property. These are places like an unattached garage, studio, barn or greenhouse.
    • Doesn’t include any part of the taxpayer’s property used exclusively as a hotel, motel, inn or similar business.
       
  • Generally, there are two basic requirements for the taxpayer’s home to qualify as a deduction:  
    • There generally must be exclusive use of a portion of the home for conducting business on a regular basis. For example, a taxpayer who uses an extra room to run their business can take a home office deduction only for that extra room so long as it is used both regularly and exclusively in the business.
    • The home must generally be the taxpayer’s principal place of business. A taxpayer can also meet this requirement if administrative or management activities are conducted at the home and there is no other location to perform these duties. Therefore, someone who conducts business outside of their home but also uses their home to conduct business may still qualify for a home office deduction.  
  • Expenses that relate to a separate structure not attached to the home may qualify for a home office deduction. They will qualify only if the structure is used exclusively and regularly for business.  
  • Taxpayers who qualify may choose one of two methods to calculate their home office expense deduction:  
    • The simplified option has a rate of $5 a square foot for business use of the home. The maximum size for this option is 300 square feet. The maximum deduction under this method is $1,500.
    • When using the regular method, deductions for a home office are based on the percentage of the home devoted to business use. Taxpayers who use a whole room or part of a room for conducting their business need to figure out the percentage of the home used for business activities to deduct indirect expenses. Direct expenses are deducted in full.


Share this tip on social media — #IRSTaxTip: How small business owners can deduct their home office from their taxes. https://go.usa.gov/xtbkP

Ways To File | Why File With Us

There are hundred of ways to file your tax returns. You can file with a CPA. You can have a Tax Accountant or have a Tax Preparer file your tax return. You could also file your taxes online (DO IT YOURSELF option) with a tax software vendor such TurbotaxTaxActH & R BlockTaxSlayer, Jackson Hewitt or even Liberty Tax. Then there is the FREE FILING options. Your options are humongous. Both H & R Block and Jackson Hewitt offer in-person store service. That’s all good.

Here is why you should file with us

  1. We promise to diligently handle your tax return with CARE as if it is OURS.
  2. We promise to Get You Maximum Refund Possible – To do this, we will fight to get you ever deductions and credits you deserve
  3. 100% Accurate Calculations – Our calculations are 100% accurate on your tax return, or we’ll pay any IRS penalties.
  4. Optional: We may require a Zoom Meeting, Google Meets or a Microsoft Teams meeting to verify and complete your tax return.

What Is a Tax Accountant?

Ok. So, you ask what a tax accountant is. The short answer, a Tax Accountant is someone who has been train in preparing income tax returns and is an Accountant. Thus, the term Tax Accountant refer to someone that specialize in the tax laws, rules, and regulations.

Ideally, a Tax Accountant training must include any of the following.

  • An Attorney
  • CPA – Certified Public Accountant
  • Enrolled Agent
  • Tax Practitioner

These are the four categories of people the IRS considers preparing taxes and represent their clients. The list of people practicing before the IRS is much longer. See Publication 947 (02/2018), Practice Before the IRS and Power of Attorney | Internal Revenue Service

However, a Tax Accountant must know tax laws as well as General Accepted Accounting Principles (GAAP). Sixty percent (60%) of tax filing deals with tax laws and the other forty percent (40%) deals with accounting.

So then, a Tax Accounting is someone with adequate knowledge of tax laws as well as General Accepted Accounting Principles. These two qualities are not mutually exclusive.

Friendly Tax Services

Friendly Tax Services is the premier income tax preparation firm for individuals, families, small business owners and the self-employed; Uber, Lyft, Taxi, and Limousine drivers; Actors, Independent Contractors and Entrepreneurs. We have empathy and understand the toll driving takes on Uber, Lyft, Taxi, and Truck drivers. That driving is time consuming. Uber drivers just don’t have the time it takes time to keep track of those business-related expenses.


Contact Us

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FRIENDLY Tax Services (Accountants and Tax Preparers)